Lilly sees drop in profit during Q2, as sales of COVID-19 antibodies fall sharply

Headline results for the second quarter:

  • Revenue: $6.7 billion (forecasts of $6.6 billion), up 23%
  • Profit: $1.4 billion, down 2%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"We delivered strong performance this quarter, with volume-driven growth across our core business and most major geographies," remarked CEO David Ricks, adding "we accelerated use of our newest medicines around the world with solid sequential growth versus first-quarter 2021."

Eli Lilly said sales of COVID-19 antibodies bamlanivimab and etesevimab reached $148.9 million in the second quarter, down sharply from $810.1 million recorded in the first quarter, as vaccinations gained pace in the US and as a result of regulatory actions. The distribution of its antibody cocktail was paused by US health officials in late June after lab analyses found it was not effective against SARS-CoV-2 variants first identified in Brazil and South Africa. Prior to that, the regulator had also pulled the emergency authorisation for lone use of bamlanivimab in response to waning efficacy against emerging variants.

"As the pandemic has ebbed and waned, [sales for our other products] have come back stronger. Our treatments for diabetes, cancer improved once doctors' offices opened," said Ricks, adding "we don't think of ourselves as a COVID company."

Meanwhile, Eli Lilly noted that the pandemic had caused around $250 million of decreased customer buying during the second quarter of 2020, including $200 million in the US, which mainly affected its portfolio of diabetes drugs. According to Eli Lilly, its worldwide revenue for the second quarter grew 12% when excluding the effects of last year's COVID-19-related stocking patterns, as well as sales from its COVID-19 antibodies and $170 million of revenue it recognised from the offloading of its Cialis rights in China.

Other results:

  • US revenue: $3.7 billion, up 18%
  • Non-US revenue: $3 billion, up 29%
  • Key growth products launched since 2014:
    • Trulicity: $1.5 billion, up 25%, putting it roughly in line with estimates, with US revenues gaining 20% to $1.1 billion, while sales outside the US were up 40% to $388 million
    • Taltz: $569.1 million, up 44%, surpassing estimates by $133 million, favourably impacted by inventory destocking in the second quarter of 2020
    • Jardiance: $356.5 million, up 36%, beating forecasts by $25 million, primarily driven by greater demand in the US and higher volumes elsewhere
    • Verzenio: $341.3 million, up 64%, with US sales climbing 48% to $209.7 million, while revenues outside the country nearly doubled to $131.6 million on higher volume
    • Cyramza: $268.7 million, up 5%
    • Basaglar: $210.7 million, down 27%, missing estimates by $55 million, hit by continued competitive pressures that resulted in lower realised prices
    • Olumiant: $208.4 million, up 44%, with ex-US sales reaching $190.6 million, an increase of 45%, driven by increased volumes
    • Emgality: $156.3 million, up 79%
  • Humalog: $607.6 million, up 9%, but missing estimates of $622.1 million, with higher realised prices due to changes to estimates in rebates and discounts
  • Alimta: $610.6 million, up 13%, driven by higher volumes, although the company expects volume declines in the second half as generics enter the market because of loss of patent exclusivity in Japan and major European markets
  • Humulin: $315.3 million, up 1%
  • Forteo: $218.4 million, down 14%, as higher realised prices in the US were largely offset by lower demand

Looking ahead:

Eli Lilly now expects revenue for 2021 to be between $26.8 billion and $27.4 billion, narrowed from a prior range of $26.6 billion to $27.6 billion, while earnings are still expected to be between $7.80 and $8.00 per share. Analysts projected earnings of $7.89 per share on $27.2 billion in sales. The company added that sales of COVID-19 therapies are seen between $1 billion and $1.1 billion, with the top end of the range cut from an earlier prediction of $1.5 billion, which had already been reduced from an initial estimate of up to $2 billion.

Commenting on the narrowed guidance, Ricks said "that's really about reducing COVID-19 antibody sales, and increasing the performance of our underlying business." He added "we do expect that as these waves happen, they will begin to subside, each wave will be lower, and a new sense of normalcy will set in."

Pipeline updates:

Meanwhile, Ricks reiterated that Eli Lilly is planning to submit its proposed Alzheimer's disease therapy donanemab, which targets a modified form of beta amyloid called N3pG, to the FDA this year. Alluding to the controversial accelerated approval of Biogen and Eisai's treatment Aduhelm (aducanumab), where the FDA deemed a reduction of amyloid plaque as being "reasonably likely" to translate into clinical benefit, Ricks said "the regulator needs to make that decision about risk and benefit, but of course, we believe that amyloid reduction leads to slowing of the disease. We've been betting on that for some time."

However, he suggested donanemab might bypass some of the controversy surrounding Aduhelm because "we're going to prove its worth," with a data readout from the Phase III TRAILBLAZER-ALZ 2 trial due out in 2023. "Our medicine works very rapidly to clear plaques," noted Ricks, adding that "by one year almost the vast majority of patients in our [Phase II] study no longer needed to take the drug. They had cleared all the plaque in their brain. That's different from all the other antibodies being studied, which are really lifetime therapies."

Eli Lilly also disclosed that it ended Phase I development of a GIP/GLP co-agonist peptide II in the area of diabetes.

What analysts said:

Mizuho Securities analyst Vamil Divan remarked "we had expected their COVID-19 antibodies to be light given updates to their government contracts, and sales of those antibodies in the second quarter were $60 million below our forecast."

Meanwhile, Edward Jones analyst Ashtyn Evans noted that Eli Lilly is "making progress in its pipeline of new drugs, with positive developments in diabetes, cardiovascular products and Alzheimer's disease." Aside from donanemab, the company also plans on filing its type 2 diabetes drug tirzepatide to regulatory authorities by the end of the year.

To read more Top Story articles, click here.